Customs duty is typically classified under which category?

Customs duty is typically classified as a cost related to the importation of goods into a country, which aligns with the category of import expenses. When a company imports goods, it incurs customs duties as part of the total cost required to bring those goods to market. This cost is usually considered part of the expenses incurred by a business, affecting its profitability and financial statements.

In accounting, customs duty does not fall under revenues since it is a cost incurred rather than income generated. It’s also not classified as cost of goods sold, which specifically refers to the direct costs attributable to the production of goods sold by a company. Additionally, customs duty does not fit within the concept of inventory losses, which are related to the decrease in value or loss of inventory, rather than a charge incurred from imports.